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Saturday, January 31, 2015

ObamaCare and Growth Imperative

I do not know if you noticed but both the Senate and House have voted unanimously to exempt veterans from the employer mandate that requires small businesses to pay penalties for not offering health plans if they expand and have over 50 employees.

This Congressional move was a rare show of bipartisanship and may be a forerunner of an effort to end the employer mandate altogether and to give businesses an incentive to grow.

What’s at issue here? The economic growth imperative.

The credo of capitalism is that if the economy is not growing, it’s failing. This applies to corporate and individual success and to middle class incomes.

It is the basis for complaints that the GDP has grown only 2.2% under Obama versus the usual 3% to 4% growth following a deep recession, the slowest recovery since World War II; that ObamaCare has impeded economic growth for small businesses by limiting that growth past 50 employees; and that it has resulted in middle class income stagnation and a record law participation (62.5%) in the job markets.

On the flip side, the pick-up in growth in 2013 to 2.6%, with a spike to 5.0% in the third quarter is primarily responsible for President Obama’s approval rating rising from the low forties to the high forties and to 50% in some polls.

This rise in approval ratings has not gone unnoticed by either political party, hence the Obama agenda to raise the national budget by 7% with a series of measures to help the middle class, and the Republican incentives to help businesses to grow by lowering health care costs for businesses by ending the employer mandate.

The growth imperative comes down to this: how to grow? In health care, will it be through government mandates investing more in promote growth? Or will it be through private entrepreneurship and limiting government involvement?

According to Forbes magazine, keys to growth are flexibility, investment, technology, and entrepreneurship. U.S. healthcare needs more freedom and entrepreneurship to grow, not more government controls. We need an “entrepreneurially venturesome economy full of experimentation and discovery.” We need something akin to fracking in health care to unleash our health care resources. This unleashing may come in the form of alternatives to employer and individual mandates and to evergrowing and crippling Medicare and Medicaid burdens.

We need a confident, incentive-based, pro-growth message, based on American values of freedom of individuals, choice, innovation, and experimentation, such as decentralizing health care, such as turning the system away from government and back to patients and physicians to let me decide how much to spend and how much to do.

Growth is our biggest problem, and our greatest opportunity. A rising tide can lift all boats but only if you don't overload the boots with too many taxes and regulations and poke too many holes in the bottom of the boats.

This afternoon I read Steven Brill’s January 19, 2013 Time Magazine muckraking article “what I learned from My $190,000 Surgery.”

The article is about his heart surgery, his hospital bill, his interviews with CEOs of three large integrated hospital systems –Steven Corwin of New-York Presbyterian, Delos Cosgrove of the Cleveland Clinic, and Jeff Monoff of the University of Pittsburgh Medical Center; the high price of MRIs, artificial hips and knees, back pain; and how to fix health care and to cut 30% off the U.S. health care bill.

Brill is an ObamaCare supporter, and says high health costs are nothis fault. It’s the fault of those deals he had to cut with health plans, drug companies, and others to get the bill passed.

Brill’s answer on how to fix the system and cut the costs is simple: have the government consolidate, then regulate the system.

2. Cap the profits of dominant systems at, say, 8% compared to the current 12%.

3. Cap the salaries and bonuses of an those who are hospital employee and who did not practice medicine.

4. Streamline appeals for patients who believed they were denied adequate care or were pressured to skimp on care.

5. Make it a requirement that these government-regulated oligopolys have as a chief executive a licensed physician who has practiced medicine for a minimum number of years.

6. Cut out those middlemen, the insurers, and if you can’t, make a rule they can’t charge the uninsured more than the insured.

The result of these regulations, instituted by liberal-minded government reformers, would save 20% of nongovernment health care costs and maybe $100 million for Medicare and Medicaid, with a total savings of $500 billion.

Brill does not say how much it would cost to support the bureaucracies needed to to enforce these various regulations or how government would develop its own insurers to replace private insurers. But never mind the details.

Says Brill, “The momentum for consolisation I have in mind is clearly there. We just need to seize it rather than resist it, and then control it and push in the right direction,” which is the left direction.

ObamaCare critics fear government will control their lives, redistribute their incomes, invade their privacy; expose their data for all the world to see; and limit their choices of doctors, health plans, and hospitals. There is some truth to all of this, but the fears are overblown.

There is also the optimistic belief that computers, the Internet, and social media, descending down from the algorithmic Cloud, will be the magic lever that will provide a cure for cancer, lift health care to a rational level and end the uncertainties and gray zones of medicine and turn it from an Art into a Science.There is also some truth to this set of beliefs.

It is already feasible , for example, to use algorithms to study body language, voice inflections, body rhythms, demographic data, interactive medical and social histories, genetic DNA patterns, to arrive at a precise diagnosis before doctors even examine the patient.

There is the reality that that information technology is not limited to use by the “good guys.” ISIS, other terrorists, hackers, greedy marketers, and foreign governments are capable of using and exploiting the Internet for their own ends.

Finally, strong and persuasive human personalities can overcome , neutralize, or supplement data. Roger Ailes, founder of Fox News, recently noted personalities of Bill O’Reilly and Megyn Kelly, contributed to their success as much as their beliefs. This is true of political leaders as well as media personalities if you look at Ronald Reagan, Bill Clinton, Barack Obama, and other persuasive personalities.

The cult of personality is just as important as the cult of data. As Carl Jung, MD (1875-1961) observed,” The meeting of two personalities is like the contact of two chemical substances; if there is a reaction, both are transformed (Modern Man in Search of a Soul (1933).

Thursday, January 29, 2015

Topsy-Turvy: An Interview with a Medical Market Guru

Q: Why do you call yourself a Topsy-Turvy Medical Market Guru?

A: Because the medical markets are turning upside down. The top is where the bottom should be, and everything is inverted or reversed from where it ought to be. A guru, of course, is someone who knows everything about everything. That’s me.

Q: Explain. Please.

A: Well, everything is consolidating at the top, in hospitals, health exchanges, health plans, and government but they are decentralizing at the bottom in the form of patient-centered, consumer-driven care with removal of those “silos” between different parts of the health system. Everything in the future will be “coordinated” and dictated by data, evidence, and value, as defined from the top-down but resented from the bottom-up.

Q: Examples. Please.

A: Take hospitals. They’re getting bigger and bigger and will soon employ 70% of all doctors and 90% of young doctors, but hospitals are setting up offices and clinics outside their walls to make their services more convenient. Of course, all hospitals and all doctors will have electronic records. Meanwhile doctors at the bottom in private practice are a dying breed.

Take health exchanges. They are a perfect example of top-down government. By February 15, the end of their 2nd sign-up period, the exchanges will have 10 million members. Yet 250,000 doctors at the bottom have decided not to accept health exchange members.

Consider Medicaid. It is growing like Topsy. It will soon top 70 million membership. Even conservative states, like Indiana, are reeling in more Medicaid recipients. Yet some 30% to 40% of doctors, depending on the state, refuse to accept those in Medicaid or health exchange plans. And as many as 20% no longer accept new Medicare patients, who are growing in numbers at the rate of 10,000 a day. Bottoms-up are is down.

Think about ObamaCare as a whole. It’s a budgetary sink hole , the main driver of our soon-to-be $20 trillion national debt. Yet ObamaCare is approaching a state of no return, of not going back, of irreversible government gains. It is now a creature of the IRS, who will have every American filling out a form about their insured or uninsured status, and who will penalize 6 million of us for not having a health plan.

Q: So?

A: Well, the Republicans at the top want ObamaCare reversed or repealed, but they can’t because at least 5 million uninsured are now being subsidized in federal health exchanges, and 10 million will be on the exchange.s So, if the Supreme Court in June rules federal health exchanges as invalid or illegal.

Republicans say the top pillars of ObamaCare – individual and employer mandates – will collapse, and the whole thing will come tumbling down. Democrats claim "massive disruption" would ensue, and hospitals and health markets would suffer terrible economic consequences.

The GOP claims ObamaCare is like Humpty-Dumpty. Critics say once Humpty-Dumpty falls off the Wall, all the President’s horses and all the President’s men won’t be able to put Humpty-Dumpty together again.

Q: Do you buy that argument?

A: No. A Peter Pan analogy is better. Peter Pan was the story of a boy who never grew up. As long as he could fly and sprinkle magic dust on everything, everything would be “fair,” and everything would come out OK for everybody. Everyone would have their "fair share"of society's cake and could eat it too.

Six of 10 Americans believe in Peter Pan and magic dust. If the Supreme Court disassembles federal subsidies, 60% of people in a Kaiser poll say government should restore the subsidies and Humpty Dumpty can be put together again.

Q: Oh, Guru, are there other factors that may destroy these fairy tale myths?

A: Two.

One is the power of smart phones and the Internet. In the last quarter, 75 million people bought Apple smartphones. These people, many of whom are millenials and middle class and many of whom resent redistribution of their incomes and health benefits, may change the system bottom-side up by demanding return and evidence for their dollar.

Two is the behavior of physicians. Nearly 50%, actually 46%, give ObamaCare a D or F grade, another 30% to 40% aren’t taking Medicaid or Medicaid patients, and 20% have either switched to cash only practices, dumped third parties, or are contemplating doing both.

If a fairy tale sounds too good to be true, it usually is. Life, you see, isn't fair. You have to work to make it fair, and Government, as hard as it tries, can't speak or act for you. Only you can.

An attempt to deceive or persuade on the basis of the merits of something or someone.

Definition, Snowjob

Today Mother Nature dropped 2 feet of snow and the temperature fell below 20 in Connecticut, where I live.

It wasn’t supposed to be this way. Global warming was going to overheat the planet. I must be naïve or stupid. I associate warming with heat and sweat, not with cold and snow.

Snowjobs

• President Obama signed an agreement with China for the U.S. to cut our carbon emissions right away while China only agreed to do its part by 2020. That sounds to me like China did a snowjob on Obama, while Obama was doing a snowjob on the American public. The public is responding with a collective yawn (Ed Rodgers, “The Planet in Peril, Yawn,” Washington Post, January 22, 2014).

• Then there’s the social media snowjob. By connecting everybody with everybody, social media will purportedly empower individuals. Instead it seems to be empowering terrorists and throwing roadblocks in the paths of brick and mortar businesses.

In health care, social media, it is said, will provide consumers with the information they need to shop for the best care, challenge physician and hospitals bills, collaborate with each other to improve health, manage and improve quality through complex algorithms mimicking clinical judgment, and bring out equitable health reform.

This may be partially so, but it also a snowjob. As Andrew Keen explains in his new book The Internet Is Not the Answer, the social media is also destroying our economy, our culture, and our values through technology overuse and creation of false, loose communities who collectively know not what they are about.

• Finally there are the snowjobs being anticipated in advance of the June Supreme Court decision on whether ObamaCare can subsidize federal exchange health plan recipients.

Obama’s lawyers are preparing a brief offering a “full-throated” defense of the Law challenging the “ strained credulity” of the political opposition, which, it claims “ does not respect the rule of the law. Its case “ rests on an acontextual misreading of a single phrse in two subclauses, ( “Obama Administration Offers Supreme Court Robust Defense of Health Law,” Kaiser Health News, January 23, 2014).

Republicans, who profess to be optimistic the Court will rule in favor of denying subsidies, are adamant. If the Court rules as they think it will and Plan A, repealing ObamaCare failes, they will go to Plan B, which will consist of an alternative to ObamaCare. Their alternative will gut ObamaCare of the individual and employer mandates. Three GOP senators, Lamar Alexander (Tennessee), Orrin Hatch (Utah), and John Barbasso (Wyoming), are now formulating Plan B. B's details of which are not yet known. But says Orin Hatch, never mind “The courts are likely to decide against ObamaCare. The language is totally unambiguous. I don’t see how they can ignore the unambiguous language that is clear-cut.” (Alexander Bolton, “Senate GOP Plots Plan B for ObamaCare,” The Hill, January 27, 2014).
No one knows, of course, whether Plan A, Plan B, or Plan C (ObamaCare stays intact) will prevail.

Meanwhile the political tensions and drama rise, the snowjobs grow to greater heights, and the anticipations build. As Benjamin Disraeli (1804-1881) cogently noted, “What we anticipate seldom occurs; what we least expect generally happens.”

Monday, January 26, 2015

Whenever policymakers and policywonks say , “We’ve got to change the way doctors are paid,” I know what’s coming.

1. Do away with fee-for-service.

2. Put doctors on salary.

3. Bundle the payments for procedure or illness episodes.

4. Place doctors on capitation.

5. Herd them in Accountable Care Organizations (ACOs.)

6. Pay them on basis of “value,” whether patients get better, rather on “volume,” how many patients they see.

7. Reduce the amount of payment for each code the doctor must submit for payment.

Each of these approaches has their advocates. Each has their rationale. Each has been tried and is being tried. About 20% of doctors are being paid by one or more of these means, and about 28% are paid partluy on the basis of value (Jason Milliman, “The Obama Administration Wants to Change How Doctors are Paid, “Washington Post, January 26, 2014).

Eighty percent are still paid mostly on the basis of fee-for-service, which is anathema among policymakers and works, because it said to promote greed, i.e. the more you do, the more you get paid. I suppose there’s some truth to this accusation, but I doubt if more 10% of doctors abuse the FFS privilege.
According to CMS, the nation’s largest payer, the nation’s doctors are paid $362 billion a year for patient care. For CMS’s contribution to that number is only going to get larger as 10,000 join the ranks of Medicare each day, and as Medicaid grows 15% or so each year and is now near the 70,000 mark.

To date, evidence is scant that changing how doctors are paid has materially improved the helath of the nation.

Why is this?

Well, to begin, with studies have shown that medical care only accounts for about 15% of a nation’s health (David Satcher, et. Multicultural Medicine and Health Differences, 2006). This is an important reminder as we are in the middle of the muddle over ObamaCare. David Satcher MD, a former surgeon general puts these numbers on the factors contributing to societal health: medical care 15%, life style 20% to 30%, other factors 55% (poverty, inferior education, income differences, and lack of social cohesion (Multicultural Medicine and Health Differences, McGraw Hill, 2006).

Two, patients are only in doctors for 1% or less of their lives. The same is true of hospitals. Most of what patients do after the leave doctors’ offices or hospitals is up to them and whether or not they fill their prescriptions, eat properly, exercise sufficiently, stop smoking, or avoid substance abuse. Much of America’s health bills – from violence, vehicular violence, coronary artery disease, lung cancer, AIDs, type 2 diabetes brought on by obesity – results from personal choices, and behaviors known to be risky.

Society’s level of health does not depend primarily upon medicine, but on personal choices and prudent behavior. Prudence is a virtue and is the greatest preventive health measure available to society. No doubt overall health can be improved marginally by waiting to discharge patients from hospitals only when well, by follow-up care, by coordinating care, and paying more attention to home care, but, for the most part, these steps have little correlation with how doctors are paid,

Sunday, January 25, 2015

This is a stretch. I was reading Barbara Tuchman’s classic book The March to Folly about the misjudgments governments make in spite of evidence to the contrary.

In speaking of the Stamp Act of 1765, which has similarities with the Affordable Care Act, she says:

“Because the Act not only required a stamp on all printed matter and legal and business documents, but extended to such things as ships’ papers, tavern licenses and ven dice and playing cards, it touched every activity in every class in every colony.”

The ACA is like that: it touches the lives of every American of every class in some way at one time of another over the next decade, and it will be make its presence known in every IRS return. And for many Americans, it is “taxation without representation,” in that it passed without a single Republican vote. So far the ACA has imposed $500 billion in taxes on Americans/ Since its inception, Americans have opposed the ACA by double digit margins in over 95% of national polls.

In the words of Tuchman, the Stamp Act “was a classic case and ultimately self-defeating case of proceeding against all negative indications.” The colonies were willing to tax themselves but Parliament and King George III rejected any alternative, such as the colonies taxing themselves. The opposition was ignored “because policymakers regarded Britain as sovereign and the colonials as subjects, because Americans were not taken too seriously.”

Parliament repealed the counterproductive Stamp Act in 1766 because of its negative effect on commerce and to ward off a rebellion by the colonies.

Through his unilateral executive actions, President Obama seems to regard himself as sovereign, looks upon Republicans and state governors with disdain, and has threatened vetoes (nine so far) if his wishes are not met. He cannot envision Congress in terms of equality or as representatives of the people. Perhaps that will come if his vetoes are overridden. Perhaps it will come with repeal. Perhaps it will never come. Perhaps it will only come with a new President.

Successful Physicians Require Capital and New Practice Models
A man should never be ashamed to own he has been in the wrong, which is but saying, in other words, the he is wiser to-day than yesterday.

Jonathon Swift (1667-1745), Thoughts on Various Subjects

Over the years, I have consistently positioned myself on the side of individual physicians as key to the best health system the U.S. has to offer.

I have been wrong. I should have listened to my own advice back in 1988, when I wrote in And Who Shall Care for the Sick?The Corporate Transformation of Medicine in Minnesota, ” To survive and thrive over the long haul, physicians will have to fight fire with fire and form doctor corporations.The other "fire" is health care corporations with access to capital, mechanisms for dealing with administrative and bureaucratic tasks, the ability to organize complex technology, bringing together professionals from various fields to deliver service as a team).

Corporations who have done these things are winning. Winning corporations include: the Mayo Clinic, large integrated hospital systems, Kaiser Health, medical megaclinics, UnitedHealthcare, and other entities that organize doctors into teams or look upon doctors collectively. Private practices by individuals or small groups of individuals are losing due to lack of capital and the capacity to do the other things.

There are signs physicians are changing and recognizing that physician collectivism rather than individualism will win the day.

That is why groups of physicians forming specialty centers to perform one procedures to a limited set of procedures or common disease like diabetes or cancer have emerged as formidable health care competitors.

That is why physicians are partnering with hospitals to gain market share in local and regional markets.

And that is why the Obama administration is pushing Accountable Care Organizations (ACOs), led by hospitals and physicians sharing “savings” are one of the pillars of the health care law. At this early stage, ACOs have a mixed track record. Many existing physician organizations declined to join the ACO movement, and some of the ACO pioneers have dropped out because of expense, bureaucratic hassles, hostility of specialists, failures to save money, or the feeling they can do ACO-type organizations on their own.

But ACOs remain in the organizational chase, and their numbers are growing.

There are now 522 total accountable care organizations are serving 15 to 17 percent of the U.S. population. The 522 total of ACOs is an increase from 370 in September 2013 and 258 in February 2013. The majority of these are CMS ACOs — Pioneer ACOs, Medicare Shared Savings Program ACOs, Medicaid ACOs or participants in the Physician Group Practice Transition program. CMS' latest round of ACO approvals in January brings the total number of Medicare ACOs to 368, up from 235 in July 2013. Despite their target populations, the Medicare ACOs are still serving an estimated 33 million non-Medicare patients.

There is nothing inherently wrong with physicians being part of a corporate team that delivers the best care and the best technologies that medicine has to offer. But it requires capital and organizations to do these things right. The important thing is to retain clinical autonomy, offering high levels of cost-effective service, and keeping the patients’ best interests in the forefront.

The company served 88.5 million individuals across all of its businesses as of Dec. 31, up from 88.2 million a year ago.

It has enrolled more than 400,000 people through the health-law exchanges, and it expects its new sign-ups to be close to 500,000.

It has increased its presence in the marketplaces to 23 states this year and plans its "footprint” next year.

It has added 15,000 customers this year in its Medical Advantage plans.

its community and state business grew its Medicaid enrollment by one million people in the past year.

Fourth-quarter revenue rose 5% in its division that includes Medicare, and 29% in the segment with Medicaid.

CVS, The Nation’s Largest Pharmaceutical Chain

CVS Health supplies more than one of every five prescriptions in the U.S. and accounts for 1% of all corporate tax revenues.

According to CVS chief executive, Larry Merlo, the U.S. health system is undergoing a health care “retailization” aimed at reducing the cost of care while making its access more convenient.

About 100 million Americans are CVS customers each year.

It has 960 walk-in “minute clinics: staffed by nurse practitioners. The clinics are open on nights and weekends with no appointments. Their prices are posted and are 40% to 80% lower than traditional physician and a fraction of the costs of emergency rooms.

The overall costs in an internal study of its 200,000 workers who use the clinics are 8% lower than those who don’t.

It has stopped selling nicotine products in its stores, and it engaged in a campaign to raise adherence to prescription use by 15%.

All of these numbers indicate a focus on health. “ Our purpose, our goal, “ says Mr. Menlo, is to help on their path to better health.

Joseph Rago, a member of the WSJ editorial board, who interviewed Mr. Menlo, comments, “Mark it down as another way private innovation is finding ways to serve patients better despite, or because of, the policy mess in Washington.” (Joseph Rago, “The Revolution at the Corner Drugstore, “ WSJ, January 24-24, 2014)

Not all of us do, of course. According to the latest polls, 40% approve of the ACA. Ten million will soon be in health exchange plans. You’re covered if you’re under 26 and under your parents’ plans. You can’t be excluded from health plans if you have a pre-existing illness. And if you’ve lost your economic way, and you’ve somehow gone astray, you’ll be protected by being provided with affordable health insurance.

So why resist federal beneficence?

It’s a long and tangled tale which I shall not recite again.

But basically, Americans don't like being treated like sheep. They don't have the sameness of sheep. They don't consider themselves as homogeneous parts of a common herd. They don’t like being thought of as black sheep gone astray. They don’t wish to be culled out of a herd by the IRS, when they choose not to have a health plan. They don’t enjoy being stripped of health benefits when they work more than 29 hours a week. They don't welcome electronc medical records announeing their health status to others, and their privacy being invaded.

They don’t appreciate having the wool pulled over their eyes when they lose their doctors and health plans after told otherwise. They resent higher premiums and deductibles when while being promised$2500 lower premiums per family. They bristle when treated called "stupid" before the law was passed.

They feel they are intelligent, self-sufficient, and capable of making their own decisions. They are not lambs who have lost their way, or who think only of sucking from the federal treasury, or who simply wag their tails in response to commands from their shepherd.

Friday, January 23, 2015

Health Reform Follies

Wooden-headeness, the source of self-deception, is a factor that plays a remarkably large role in government. It consists of assessing a situation in terms of preconceived fixed notions while ignoring or rejecting any contrary signs. It is acting according to wish while not allowing oneself to be deflected by facts.
.Barbara Tuchman, The March of Folly (Alfred A. Knopf, 1984)

The Obama Administration has announced it has now has enrolled 7.1 million people in health exchanges. These people include the newly and automatically enrolled. The ACA is 80% of the way towards its goal of 9.1 million. By June, when the Supreme Court rules if people can enroll in federal exchanges, the administration expects to cover 10 million of the uninsured.

And so the march towards the high drama surrounding the Court’s decision grows and crystalises.

The Obama administration says it would be sheer folly to deprive 10 million people of health insurance and let them die on the streets, in their homes, or in institutions for the destitute.

To put in more elegant terms, “The outcome in King could determine whether millions of people continue to have access to affordable, comprehensive insurance.” ( “Predicting the Fallout from King v. Burwell – Exchanges and the ACA,” NEJM, January 8, 2014).

Or, as a medical school classmate friend of mine said when I predicted the Court would rule against the Administration, “You can’t be serious.”

This attitude reflects the pre-conceived wooden-headedness of government. Only government can care for the poor. Only government has compassion. Only government can level the economic playing field. For God’s sake , in the name of equity and social justice, doesn't everyone realize it is the duty of government to redistribute wealth and health.

This may be, but it ignores certain facts. Somewhere in the neighborhood of 55% to 60% of the American people, don’t trust government, resent losing their doctors and health plans, think the ACA ought to be repealed or fixed, voted against Obama policies in the midterms, are opposed to ObamaCare in over 95% of polls over the last five years, and believe additional entitlements contribute too much to our $18 trillion national debt.

So much for the ACA follies.

The GOP has its own set of follies.

How does it propose to deal with 10 million out there now covered and the 20 million more yet to be covered?

Surely some sort of safety net is needed. We are all human beings with human needs, and the poor will always be with us and will always need our help.

How would the GOP provide that safety net? Through Medicaid expansion? Tax credits for all? Tax loopholes for those who need loopholes to survive? Removing regulations, cutting taxes, slashing the corporate income tax, the highest in the world, and by so doing, lifting all economic boats and letting prosperity insure upward social mobility?

Can “growth,” “productivity,” and “innovation” plug the holes in the safety net? Or does it require government professionals, or the “philosopher- kings," like Obama, wwho are disciplined in the art of government?

We are about to find out. The approaching King v. Burwell ruling has all the ingredients, tensions, and conflicts of high drama.

Thursday, January 22, 2015

The American health care industry is filled with opportunities to establish focused factories ranging from those that perform only one procedure, like cataract surgery, to those that provide the full panoply of care for a disease like cancer.

The main problems facing health care and the reason for being of health reform are high costs, uneven quality, and limited access.

Is there any way of overcoming obstacles to good care in consumer-driven democracy other than government-mandated care?

Yes, said Regina Herzlinger, professor at Harvard Business School in her 1997 book Market-Driven Health Care.

Her answer was two-fold: value-hungry consumers and independent physician entrepreneurs satisfying that hunger.

The answer, she explained, resided in health-care “focused factories”, an off-putting term that appeared in a Harvard Business Review in 1974. The term meant focusing on a limited product, consumers, and efficiency throughout an entire organization.

In health care, a focused factory consists of groups of physicians working together to provide a clear, limited objective - the treatment of a specific health care problem or set of problems.

• The treatment team is organized around patients’ every need and addresses every detail catering to that need.

Focused factories are proliferating around the U.S. They “focus” on the health care consumer. They are a factory in the sense they are efficient, safe, responsive, uniform, and fast in delivering a high quality product.

The “factories” often focus on a procedure, such as cataract surgery. They are comprehensive, anticipating and responding to the patients’ every need, being picked up and delivered to the factory, meticulously shepherding them through every aspect of the procedure, following up through patient phone calls and visits, and working hand-in-hand with the ophthalmologist-owners of the factory.

According to Herzlinger, “The driving force (behind focused factories) is a generation of consumers who are empowered, pragmatic, narcissistic and manipulative. They're the ones who have changed the rest of the economy and they're very interested in health care. There's no reason for any rational person to believe that they're going to say, ‘Oh no, leave health care in the hands of these people who are going to tell me what to do.’ Today's consumers simply won't accept that. The second driving force is technology, which has already vastly increased the quality and lowered the cost of health care.”

I believe there will be a third driving force: consumer-demands for direct, personal, accessible, cost-efficient health care without third-parties. Third party supervision, whether governmental or insurer administered, is costly, accounting for 40% to 50% of overhead in the typical physician’s office, and it is distracting, leading to 20% of physician time spend on paperwork rather than time with patients. These expenses and distractions have to end. One solution may be direct primary and surgical care, wherein costs are lower and care is more personal and immediate and known in advance.

As I listened to President Obama’s State of Union address and read its 6500 word text, I thought of the World War II song, “Accentuate the Positive and Eliminate the Negative.”

The President did a good job with the positive.

“Tonight, after a breakthrough year for America, our economy is growing and creating jobs at the fastest pace since 1999. Our unemployment rate is now lower than it was before the financial crisis. More of our kids are graduating than ever before; more of our people are insured than ever before; we are as free from the grip of foreign oil as we’ve been in almost 30 years.”

He eliminated the negatives from his speech: ISIS gains in Yemen, Syria, and Iraq; he and his party’s crushing defeat in the midterms; the daunting and likely prospect the Supreme Court may bring down ObamaCare; healthcare.gov’s continuing troubles, health plan cancellations; or the high premiums and deductibles associated with the ACA, or the fact that he had nothing to do with the fracking revolution, which is making the U.S. energy independent, or the opposition of 68% of Americans who disagree with his opposition to the Keystone Pipeline.

He was big on the veto threat:

“We can’t put families at risk by taking away their health care, or unraveling new rules on Wall Street, or refighting past battles on immigration, And if a bill comes to my desk that do any of these things, it will earn my veto.”

In other words, on the big issues, it's my way or the highway.

Obama really didn’t say much about health care reform, probably because 58% of the public disapprove of it. He said health care inflation is at lowest rate in fifty years, without mentioning premiums, deductibles, and co-payments are at a record high for many in the middle class. He mentioned 10 million more Americans are insured, but neglected to say millions of middle class Americans have lost their health plans and doctors, and people on Medicare, Medicaid, and health exchange plans are having a tough time finding primary care doctors.

He ended his speech with a homily about being more cooperative with Republicans but added he would veto anything he disagreed with. He spoke of “good politics,” which translated, means, I will veto anything that contradicts or distracts from my liberal legacy.

All in all, his talk was an in-your-face, defiant, combative stab at the Republicans. It contained an ambitious agenda aimed at his Democratic base, with the hope of rallying the Middle Class to the Big Government cause.

The address was disconnected with reality since the GOP Congress is unlikely to pass his proposals. The text of the speech does not mention the employer or individual mandates or the frustrations associated with the IRS penalties and paperwork associated with ObamaCare.

His words were , however, a frank and long overdue acknowledgement of economic difficulties facing a shrinking Middle Class and the State of Disunion among Americans and their two major political parties.

Perhaps the President was right when he said, “The shadow of crisis has passed, and the State of the Union is strong.” I don't think so, but let us hope so. We shall see that the voters say in 2016, which was what this address was all about.

Tuesday, January 20, 2015

Memo to President: You’ve Lost the Middle Class

Dear Mr. President:

Good luck on your State of the Union address tonight. You may need it.

Oh, I know you’ve had a bump in your approval lately, from 41% to 45% approval overall. I know the economy has rebounded lately, with a 3.5% GDP growth rate in the last quarter. I know you are a master at shifting blame to Republicans not to your policies. And I applaud your message that you want to rescue the middle class.

But let’s be honest. You’ve lost the middle class.

The middle class judges politics by results, not rhetoric, No matter who sweet you sound, only 49% of Americans believe the economy improved in 2014, only 37% approve of your foreign policy, 80 % want you to create jobs, 75% want you to defeat the Islamic State, 50% want you fix the health care law, and only 31% think you’re headed in the right direction (latest WSJ. NBC News Poll).

The middle class, the great large majority in this country, is floundering with loss of income, declining net worth, wage growth, and diminishing hope. They want change, and it shows in the voting choices. Since your administration started in 2008, the Senate have gone from 57 Democrats and 2 friendly independents, to 44 Democrats and 2 friendly independents; the House from 257 Democrats to 188 Democrats; and your party now holds only 18 of 50 governorships, and 30 of 68 state legislative chambers.

You can’t ignore these number, Mr. President. You are losing, big time. And be mindful. You said the midterms were about your policies.

These numbers are not good signs, Mr. President. Working-class, middle class America no longer buys into your redistribution schemes. They are skewed toward the upper and lower classes. These schemes have produced the greatest income inequality in history. Keynesian schemes with government stimuli and grand social welfare schemes don’t work, if they ever did. The private economy and free enterprise, not government control and regulations, create jobs.

You have another problem as well, Mr. President. Americans believe in economic strength at home, and military and diplomatic strength abroad. They believe in patriotism and leading from in front not from behind.

Current consumer behavior reflects these beliefs. “American Sniper,” based on the memoir of a deadly sniper in Iraq, is drawing huge crowds in conservative smaller cities in middle America, in fly-over country, but not in the largely liberal big cities of the East and West Coast.

Mr. President, there is a revolt going on out there among pragmatic middle class Americans, who believe in America’s fundamental values. Pay attention, Nr. President, to the broad middle of the country – and their geographic, economic, and cultural beliefs. They are trying to tell you something, and it may not be what you want to hear – that middle Americans believe in self-sufficiency not government-dependency, in making room for the upwardly mobile middle class, not in lowering the boom on the successful upper class.

Monday, January 19, 2015

Can We Have Our Economic and Health Care Cake and Eat It Too?

Would you eat your cake and eat it too?

John Heywood (1497-1580), Proverbs

Tomorrow President Obama will give his fifth state of the Union address. Obama will say, we can have our health care cake and eat it too, namely, we can provide the best economic and health care in the world by raising taxes on the rich, erasing income inequality, and helping the middle class by lowering health costs while providing world class health care.

You can , in other words, have your health care cake, access to some of the best health care in the world. You can have the best of both worlds, and eat it too, at an affordable price.

Republican critics assert: you can’t have it both ways: “free” health care from government and world class health care delivered an innovative private sector handicapped by oppressive government regulations.

At issue politically are the middle class, who comprise the majority of American voters. Control them, make them dependent, and you control government.

As shown by the midterms, voters mistrust government by 60: 40 margins, with the main issues being the health of the economy and the health of health care.

The public is waiting to see what Republicans offer as an alternative to ObamaCare. That opportunity may come if the Supreme Court rules against subsidies on federal health exchanges. Americans are waiting to see the trade-offs and the opportunity costs between the ACA and a GOP alternative plan,

In considering these alternatives, Americans should compare health care results in Europe and the United States.

Most would also agree more universal health care coverage and more generous social welfare programs comes at a cost – higher taxes than in U.S.(roughly 50% to 35%), higher unemployment ( 12% to 6%), slower economic growth ( - 0.1% v. + 3.5%), greater public unrest over high immigration rates , hardening of class divisions, more isolated immigrant minorities, lack of upwards social mobility, and lower growth rates of innovation, entrepreneurial, and technological with economic stagnation.

President Obama seems to prefer the European model because of its “fairness” and its emphasis on big government solutions, but his policies, while they have helped U.S. economic recovery, and aided the upper 10% of the upper classes and the lower 10% on the economic ladder, do not impress the American middle class, who have suffered income losses from $53,000 to $47,000 with decreases in their net worth, with higher taxes, increased health care costs and health plan cancellations, and diminished wage gains, and the majority of whom (57%) still feel we are in a recession.

Tomorrow night we shall see how many Americans wish to buy President Obama’s version of the American economic and health care cake.

Sunday, January 18, 2015

Enigma: Intelligent Use of Intelligent Machines to Reform Health Care
It is a riddle wrapped in a mystery inside an enigma.

Winston Churchill (1874-1965)

Yesterday I saw The Imitation Game. The movie tells the story of how mathematician Alan Turing created intelligence machines to decrypt and translate the German military’s coded radio transmissions during World War II. The setting for the movie is Bletchley Park in England, as that nation, with Winston Churchill as its leader, struggled to survive using artificial intelligence as one of its principle weapons.

Throughout the movie, questions are raised: Can machines think? Can they imitate the human mind? Indeed, can they, will they, and should they eventually replace humankind?

The answers, according to the movie script, are No, No, No, except. of course, when machine logic is needed to supplement human intelligence when it fails or falters and when it comes to winning the war.

Today, smartphones are immensely more powerful and more imitative human intelligence t han Turing’s machine. But the messages being decoded are more complicated too.

So are the issues. In the case of health care: Can computer intelligence replace, or overrule, human intuitive diagnosis and treatment judgments? Can computers decode and simplify the millions of federal regulations and unravel the demands of individual and employer mandates? And if so, in what circumstances?

To complicate matters, the enemies are not evil, bent on destruction. The enemies are trying to help us, not harm us. The enemies are high health costs, unnecessary care, unrealistic hopes for cure, exploitative special interests, and wasteful bureaucracies.

In many instances, as Pogo has said, “ I have met the enemy, and he is us.”

We want what is impossible to have or to afford on a universal scale, especially when you consider we shall all age, sicken, and have limited life spans even with the most advanced intelligent information technologies.

What is the answer to this most intriguing of all enigmas? The answer is using computers as supplements to human intelligence in selected circumstances, not as a do-all, be-all, one-size-fits-all solution. Computers are our tools, circumscribed to work in limited circumstances, not our masters all they behold.

Computers, for example, are and will be indispensable for unraveling the mysteries of the genetic codes that dictate what diseases we might get in our lifetime, for evaluating what treatments work best for some diseases, for diagnosing certain rare diseases, for turning malignancies and other fatal condition into chronic disorders, for treating certain immunological diseases, for empowering patients to find the information and providers they need to address their individual conditions.

Computers will not be useful for those patients seeking dire personal contact with a physician, for obvious maladies requiring obvious commonsensical solutions, for avoiding proven treatments that everybody agrees work, for replacing skilled diagnosticians who can cut to the heart of a problem quickly without computer generated information, for human emotional , mental, and economic dilemmas that beset us all at certain times in our lives.
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I close with comments from Leon Wieseltier (born 1952), critic and contributing editor at the Atlantic, in today’s New York Times in a piece entitled “Among the Disrupted.”

“The discussion if culture is being steadily absorbed into the discussion of business. There are ‘metrics’ for phenomena that cannot be metrically measured. Numeric values are assigned to things that cannot be captured by numbers. Economic concepts go rampaging through noneconomic realms. Where wisdom once was, quantification will now be. Quantification is the most overwhelming understanding of, well, everything…There is no more urgent task than to think critically about the salience, even the tyranny of technology…Every technology is used before it is completely understood. We are living in that lag, and it is the a right time to keep our heads."

Saturday, January 17, 2015

ObamaCare Progress Report

The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.
Franklin Delano Roosevelt (1882-1945), 1938 speech

It ‘s time for an ACA progress report.

• Marilyn Travenner, CMS head, announced she is retiring in February after 5 years in office. She is noted or blamed for 3 things. She oversaw: 1) the disastrous first launch of health exchanges; 2) double counting 400,000 people in federal dental plans to reach an enrollment goal of 7 million in that launch; 3) the historic expansion to Medicaid, now covering nearly 70 million Americans. Travenner's successor will have to be prepared to adapt to a disastrou Supreme Court decision on federal exchanges which would cause millions to drop or cancel plans and disrupt the entire insurance market.

All told, today there are 10 million more insured Americans, 5 million or more who are receiving federal subsidies.

• There is much chatter among the political classes about what will happen if the Supreme Court rules against subsidies in federal exchanges in June. A few words about background. Obamacare proposed to expand coverage by two mechanisms: 1) expanding Medicaid, which is a mission accomplished; 2) creating regulated insurance exchanges, in which lower income people would be subsidized, which remains up in the air until the Court acts. The ACA wording restricts subsidies through exchanges “established by the states.” King v. Burwell plaintiffs claim that wording makes federal exchange subsidies illegal. Only 14 states have health exchanges; 36 do not. If the Court ruels against federal subsidies, that might leave 10 million out in the insured cold. There are 4 options to address the problem:

1) Let ObamaCare burn, i.e. collapse of its weight and let 10 million now subsidized suffer consequences of being uninsured.

2) Fix the wording of the law so that 10 million will continue to uninsured and ACA will go forward as is.

3) Wait for 36 states to build their own exchanges to their citizens can become eligible for exchanges.

4) Repeal , replace, or change ObamaCare with a GOP plan covering the 10 million while expanding coverage for other uninsured, presumably with universal tax credits. The GOP has yet to formalize and advance such a plan, and Congress would have to pass it under the threat of a Presidential veto.

That the progress report. Perhaps limbo report would be more appropriate.

Friday, January 16, 2015

The color gray conveys uncertainty. And nothing is more gray than the future of health reform.

This day two articles reflect this grayness.

One, “Addressing the Challenge of Gray-Zone Medicine”,New England Journal of Medicine, January 15, 2014. Its authors are from the Harvard Kennedy School, Massachusetts General Hospital, and Press Ganey Associates, all in Boston.

They comment:

“In truth, there are large gray zones in which intervention is clearly neither clearly effective nor clearly ineffective – zones where benefits are unknown or uncertain and value may depend on patients’ preferences and available alternatives.”

The authors posit the notion that shrinking the gray zone and lowering costs resides in four policies: 1) utilization review based on comparative effectiveness; 2) financial incentives based on evidence-based comparisons; 3) bundled payments discouraging unnecessary or questionable care; 4) capitation which does the same as bundled payments.

Their solution is to combine comparative research programs with reimbursement policy to enhance return on investment.

Two, the second article is an interview appearing in The Health Care Blog conducted by Robert Wachter, MD, a West Coast academic credited with launching the hospitalist movement. The title of the interview is “Healthcare and the Second Machine Age.: An Interview with Andy McAfee."

Andy McAfee is associate director of the Center for Digital Business at MIT’s Sloan School of Management. He is also coauthor (with his MIT colleague Erik Brynjolfsson) of the 2014 book, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies. McAfee is a “technology optimist.” He appreciates the upsides and downsides of IT. The interview will be featured in a continuing series of inteviews in Wachter's forthcoming book on health IT, The Digital Doctor: Hope, Hype, and Harm at the Dawn of Medicine’s Computer Age.

Here are two exchanges in the interview.

Wachter: : We always like to think we’re special in medicine. We’re so different. It’s so complicated. Do you see any fundamental differences between healthcare and other industries that will shape our technology path?

McFee: There are two main things that might retard progress in medicine. The first is healthcare’s payment system, particularly how messed up it is trying to match who benefits versus who pays. The other thing is the culture of medicine. I understand that it’s changing, but there’s still this idea that “how dare you second-guess me, I’m the doctor.”

Wachter: But we can’t be alone in that. I’m sure many industries have their stars – supported by their guilds – who think, “We’re at the top of the heap, with high income and stature. We’re going to fight this technology thing, since it could erode our franchise.”

McFee: Sure, but in the rest of the world eroding the franchise is what it’s all about. It’s Schumpeterian creative destruction , the theory advanced by Austrian economist Joseph Schumpeter – it is, in essence, economic Darwinism, and forms the core of today’s popular notion of “disruptive innovation”, so if you’re behind the times and I’m not, I’m going to come along and displace you and the market will speak to that.

Which brings me to point of this blog. According to a recent Booz Allen survey of 400 doctors, only 10% of specialists like the direction health reform is headed. This is important because two-thirds of American doctors are specialists, and they fear they will become victims of economic Darwinism, sacrificed in the name artificial intelligence.

Specialists do not like being secondary actors of bundled or capitated pay in accountable care organizations, of being singled out as the main perpetrators of high-cost medicine, of being considered raw data for electronic health record systems, and of being second guessed and paid on the basis of that data. Specialists, because of their experience in narrow fields of medicine where many of the uncertainties have been winnowed out before they see a patient referred to them, often deal in fewer uncertainties than primary care physicians seeing data-unfiltered patients and remote data-driven physician makers and technocrats. Specialists believe they deserved to be paid fee-for-service on the basis of their intuitive clinical judgment and skills rather on the basis of some computer algorithm.

When they come down from their Ivory Towers, idealistic technology reformers will confront the reality that America's medical specialists do not agree with the high tech point of view: that payment based on high tech solves high cost health care.

Thursday, January 15, 2015

Seeking Common Ground for Patients and Physicians
Survey findings reveal that only one-third of consumers (33%) and administrators (34%) think that the healthcare system is on the right track, while just one-quarter of primary care physicians (24%) and one in 10 specialists (10%) share that view.

Everybody agrees these organizations require : 1. access to capital, 2. mechanisms for dealing with administrative and bureaucratic tasks, 3. capacity to organize complex technologies and bring together professionals from various fields and patients and physicians onto some common ground.

Everybody agrees third parties from government, health care business interests, employers, drug companies , medical device manufacturers, data generation and tracking companies are not and will not go away.

Everybody agrees the health system is overly complex – so complex nobody can get their arms around it.

Seeking Solutions and Common Ground

So how do participants in the system respond?

By either seeking simplicity and common ground.

Hospitals respond by consolidating and employing physicians so that they can present insurers with a common front and a single integrated bill.
Government responds by trying to consolidate , control , and pay for everything under one federal roof – government agencies, insurers, hospitals, drug companies, labs, medical device firms.

Consumers and the computer industry responds by using Internet search engines, smartphones and other Internet devices and apps to simplify and expand and empower patient choices.

Physician Responses

Physicians respond by seeking to simplify patient choices:

• by making it simpler for patients to go to a physician with whom they are familiar through the use of information technologies (by setting up physician websites and other forms of communication).

• By helping patients cope with the complexity by making it convenient for patients in their clinics and practices through organizations like Health Leads to gain access to social services, home care, and medical transportation (The Physicians Foundation has backed Health Leads with $2 million in grants to help in this effort).

• By training themselves and their staff to meet and exceed patient expectations and to simply those moments of truth when the patient is in their office (see Susan Keane Baker, Managing Patient Expectations: The Art of Finding and Keeping Loyal Patients).

• And by setting up direct pay/concierge practices to lower the cost of care by eliminating third parties and facilitating more direct, personal, and uncomplicated care, as 20% are either already doing or plan to do (Gerard J. Gianoli, MD, “Saying Goodbye to Third -Party Medical Payments: No Insurers, No Government, No Surprise Bills, “ Wall Street Journal, January 15, 2014).

It would be ideal, of course, for everybody to be on common ground , and to eliminate or simplify all the complexities and hassles of the present system. That is not going to happen. In the meantime, let’s fill the gaps between patients and access to care through innovative solutions that put patients first and make it easier and more effective for physicians to care for them.

Wednesday, January 14, 2015

The New American Physician, As Revealed by 2015 Merritt Hawkins Survey of Final-Year Residents

The days of new doctors hanging out a shingle in an independent practice are over. Most new doctors prefer to be employed and let the hospital or medical group handle the business end of medical practice.

Mark Smith, President of Merritt Hawkins, an AMN company, commenting on 2015 survey of final year residents, to which 1200 of 24,000 responded.

Merritt Hawkins is the nation’s largest physician recruiting firm. It publishes national surveys of physician. The latest 2015 survey is of physicians in their last year of residency.

The survey reveals the profound transformation of American medicine from independent practice to salaried employment by hospitals and medical groups. It also shows that the supply of physicians far outruns its supply.

Here, in brief, are highlighs of its 2015 survey of last year medical residents.

1. Newly trained doctors are in high demand.

- 63% completing training in 2014 received 51 or more job solicitations.

- 46% received 100 more or more job solicitations.

2. New doctors prefer to be employed by a hospital or medical group.

- 92% of those being recruited prefer a salaried position to independent practice.

- 2% prefer independent solo practice.

3. There is bad news for rural areas.

- 67% prefer to locate in communities of 25,000 or more

- 3% prefer to locate in communities of 25, 000 or more

Other key findings are :

- Newly trained physicians crave most having free time, paying off educational debts, and a balanced life style.

- 39% say they are not prepared to handle the business side of medicine.

- 56% received no formal instruction about business matters.

- 78% expect to make $176,000 or more in their first year out of residency.

- 25% say if they had it to do over again they would pick a career other than medicine.

- 93% would prefer to live in a community of 50,000 or more.

Translated, these numbers mean that the days of private solo practice are drawing to a close, that demand for doctors far exceeds the supply, and that young doctors are in the enviable position of entering practices with high salary expectations in larger cities. They are likely to hve more free time and more balanced life styles than their predecessors in private practices.

As I indicated in my previous blog, these prospects are attractive to younger, female , primary care practitioners, and to salaried physicians seeking economic security , but not so appealing to older physicians, specialists, and practice owners who cherish their independence and clinical autonomy.

Tuesday, January 13, 2015

What Physicians Think of ObamaCare and What They Are Doing in Response to It

How can you know what physicians think until you see what you say.

Anonymous

Patients are asking ,”What do you doctors really think about ObamaCare?” They trust their doctors, and they want to know what they think.

It's am important question, for doctors remain an integral essential part of the health system. How they react to the health law may determine its future.

According to a 2014 biennial survey of 20,000 physicians conducted by the Physicians Foundation, objective evidence exists how physicians feel about the Affordable Care Act and how they are responding to its injunctions and mandates.

Here is how physicians responded when asked how they felt and are reacting to ObamaCare.

Physicians said:

• 81% - feel overextended or practicing at full capacity

• 19% - still had time to see more patients

• 53% - were employees of hospitals or large medical groups

• 35% - were in independent practice

• 17% - were in solo practice

• 29% - would not choose medicine as a career if they had it to do over again

• 44% - were positive about future

• 50% - would still recommend medicine as career

• 69% - believed their clinical autonomy was compromised

• 24% - didn’t accept Medicare patients or limited the number they saw

My comment: Does what physicians think and do abot ObamaCare make a difference?

I think it does.

Physician thinking and actions portend less access for Medicare, Medicaid, and health exchange patients and a growing physician shortage even in the face of greater insurance coverage. Their practices and perspective fly in the face of the political reality that voters distrust ObamaCare and trust physicians more than government. When all is said and done, this fundamental question arises: What good in increased coverage without doctors to care for patients?

But there is a huge problem: by and large most people are unaware of what physician think. Increased and objective awareness of what physician think needs to be transmitted on a greater scale and in more systematic way to the media and through a widely publicized book on the subject, with a title such as How Physicians Feel About ObamaCare: and How They Are Reacting and What They Are Doing about It.

Monday, January 12, 2015

What Can Doctors Do?

Let us do, or die.

Robert Burns (1759-1796), Scots Wha Hae

What can doctors do about the sorry state of private practice, medical affairs, and health reform?

This is not an idle question. The numbers speak for themselves. Somewhere between 55% to 59% of Americans want ObamaCare repealed or replaced; 44% of doctors plan to take steps to limit access to care; 45% give Obamcare a D or F grade, while only 3% give it an A; by 60/40 margins midterm voters voted Republican, most largely on the basis of a weak economy or on ACA “trainwreck.”

In his poem The Charge of the Light Brigade,Lord Tennyson wrote, “Ours is not to reason why, ours it to do or die.” I would change this to read, “Ours is to show the reasons why, Ours is to do or die.”

Why is the private practice of medicine dying or in severe distress? There are many reasons why, which the Physicians Foundation, a nonprofit organization has articulated in its watch list.

These are things to watch.

• Watch for rapid hospital consolidation. As hospitals consolidate into ever larger integrated systems, it not only gives them monopolies but the capital and leverage to negotiate higher fees from 3rd parties , to buy physician practices and to raise fees for the physicians they employ. Salaried physicians have no control over those fees. Sometimes called “facility fees." Physicians can only refer to specialists and to departments within the hospital system that employs them.

• Watch for the volume of paperwork physicians must handle. Nonclinical paperwork and administrative and regulatory pressures now require physicians to spend 20% or more of their time filling out forms, entering data into electronic records systems, or hassling with 3rd parties to gain permission to do a procedure or perform a test. These tasks take time away from patient care.

• Watch for the introduction of the ICD-10 coding system on October 15, 2015. This dramatically expanded system, which contains a 10 or more fold increase in codes a doctor must master in order to get paid, requires more data entry and data clerks to enter that coded data into a labyrinthic maze. If codes are entered improperly, payment will not be forthcoming, audits may ensue, and even imprisonment for fraud may follow.

• Watch for increasing lack of transparency with mounting complexity of the system with confusion among those who charge and those who must pay the bills. Lawyer and journalist Steven Brill, in his book America’s Bitter Pill, highlights this confusion. He interviewed the CEO of a hospital, whose institution charged $200,000 for an open heart procedure on Brill, and the CEO of the UnitedHealthGroup, and neither could rationally explain the contents of the bill.

• Watch for lack of physician access. According to the Physician Foundation’s 2014 Biennual Survey, nearly half (44%) of physicians plan to limit access to new patients either by retiring, pursuing another career, becoming a hospital salaried employee, a hospitalist, or a locum tenens physician. Others may switch from being paid by a 3rd party to direct pay concierge practices. The reasons for these private practice switches are many – low reimbursement, exclusion from networks, harassment hassles, loss of autonomy, malpractice pressures, unaffordable practice expenses, and dissatisfaction with dysfunctional electronic health records systems.

What can physicians do? Among other things, they can make the public aware, through systematic and objective national physician surveys, of what physicians think and how they react to harmful health reform measures.

Let us watch and pray that things change for the better and that health reforms do patients no harm, distract from the doctor-patient relationship, or further limit access to care. Otherwise, private practice as we know it will wither and die.

Among the cognoscenti, Harvard University is known for many things - the world’s leading and America’s oldest university at 378 years, the most highly endowed institution of learning at $38 billion, the most highly compensated university faculty, the most frequent source of Nobel Prize winners, the universal backer of ObamaCare, its lavish health care insurance benefit plans for Harvard faculty, its reputation as a liberal institution and as the alma mater of President Obama, Jonathon Gruber, and other ACA supporters and architects, and last, and not least, as the home of the satirical Harvard Lampoon, a Harvard humor magazine established by 7 undergraduates in 1876.

Harvard has a rich tradition of lampooning others.

But now the Harvard faculty, not Harvard students, are being lampooned. Harpooned may be a better word. The faculty is being ridiculed for objecting en masse to increased deductibles, co-pays, and premiums in its health plans. Harvard critics , unconnected to the revered institution, are chiding the Harvard faculty for what critics see as the monumental hypocrisy towards ObamaCare. For good reason. The public at large has been enduring cost burdens and losses of doctors and hospitals for some time now. But not the Harvard faculty, not until now.

Now the faculty is crimson (pun intended) over hikes in health care rates and inconveniences. Until now, the famed faculty seemed unaware these high rates and inconveniences had been hoisted and imposed upon the rest of us .

This unawareness brings to mind two quotes.

One, from Walt Kelly (1913-1973), creator of Pogo, “ We have met the enemy, and he is us.”

Two, from Lewis Carroll (1832-1898), of Alice in Wonderland fame, "The Queen turned crimson with fury, and after glaring at her for a moment with fury like a wild beast began screaming, ‘Off with her head? Off with __.’”

Surely not off with the head of President Obama and not off with his health plan, but off with Harvard's pique about being grouped with the rest of the populace.

Which brings me to one of the 20 editorials or Op-Eds now running lampooning the Harvard faculty’s reaction to ObamaCare's soaring costs, which the faculty interprets as the unkindest cuts ever inflicted upon their erstwhile hero and their cherished ideology.

This is from the editorial staff of the Chicago Tribune )(”Harvard’s ObamaCare Revolt", January 8. 2014). it is an harpoon plunged into the thin skin of Harvard faculty members.

“Harvard professors are learning, extremely belatedly, what smart people knew from Day One. ObamaCare is disruptive and expensive. All that free care is not free. Somebody has to pay. Make that: Everybody has to pay. No exception for Harvard professors. You don’t need a Harvard Ph.D. to understand that.

Saturday, January 10, 2015

From phone attachments that can diagnose an ear infection to apps that can monitor your mental health, a range of new high-tech tools promises to tilt health-care control from doctors to patients.

Eric J. Topol,MD, cardiologist and author of The Patient Will See You Now: The Future of Medicine Is In Your Hands(Basic Books), in “Your Smartphone Will See You Now, “ Wall Street Journal, January 10-11, 2015

Although this blog is entitled Medinnovation and although I wrote a 2007 book Innovation-Driven Health Care: 34 Key Concepts for Innovation, I am not quite as enthusiastic as Dr. Eric Topol as smartphone innovations.

Topol predicts, among other things, that:

1) You will soon be able to demand and get a secure video consultation at any time of the day or night.

2) Virtual video visits will replace physical doctor visits.

3) Hospitals of the future will be roomless data surveillance centers for remote patient monitoring.

5) You’ll be in the driver’s seat when you see your doctor, for you will have your personal data in your smart phone in your hand. You, not your doctor, will be the boss.

6) A doctor shortage will be a thing of the past.

7) Pyschiatrists will be passé. With smart phones, you will be able to monitor our state of mind and the degree of your pyschosis by the tone and inflection of your voice, your facial expression, your breathing pattern, your galvanic skin response, and your brain waves.

8) You will even have skin in the smart phone game.you can take pictures of your rash, and a computer algorithm will tell you what it is.

9) You’ll be able to integrate your individual data with data from the population as a whole, and you can pre-empt the progress of your disease.

10) Massive online information will pull together information from billions of individuals to determine the right diagnosis and the best treatment.

Topol sums up the potential of smartphones this way, “As more medical data is generated by patients and processed by computers, much of medicine’s diagnostic and monitoring aspects will shift away from physicians like me. The ‘doctorless’ patient will remain in charge, turning to doctors chiefly for treatment, guidance, wisdom, experience, empathy and the human touch.”

I like the last part, but for the most part, I don’t believe all of what Dr. Topol is predicting will happen or is necessarily a good thing.
Data-driven medicine by smartphone may not be what they are cracked up to be. They may not empower or emancipate patients from their doctor. Smartphones may foster the them in the illusion that artificial intelligence can replace human intelligence. The medical world will still be strewn with snares, delusions, traps, pratfalls, and pitfalls of the false assurance that data trumps experienced minds in human relationships. Data-driven health care is not the same as innovation-driven health care. Data is a small part of a larger equation. There are no absolute data-truths, only human interpretations of those truths.

Potential Fallout from King v Burwell
The U.S. Supreme Court’s decision surprise announcement on November 7 that it would hear King v. Burwell struck fear in the hearts of supporters of the Affordable Care Act.

Nicholas Bagley, J.D. David K. Jones, PhD, and Timothy Stoltzfus Jost, J.D,, “Predicting the Fallout from King v. Burwell – Exchanges and the ACA,” New England Journal of Medicine, January 8, 2014

In my tetralogy of E-books on the story of ObamaCare, in each book I have a section in each book called “Political Fallout.” (only one of these books The Road to Hell Is Paved with Good Intentions is currenltyon the market). In politics, “fallout” is a word that has come to connote what happens when a disagreement among rivals cannot be settled. There is no more pitched rivalry than those who support or oppose ObamaCare, a principle issue of contention between a Republican Congress and President Obama and followers.

In the words of three legal scholars writing in the January 8 New England Journal of Medicine, “At stake is the legality of an Internal Revenue Service (IRS) rule extending tax credits to the 4.5 million people who bought their health plans in the 34 states that declined to establish their own health exchanges under the ACA.” There are 13 million people eligible for tax credits in these credits in 2016.

Two long shadows hang over ObamaCare’s future.

One is a GOP Congress repealing, replacing, underfunding, or otherwise undermining ObamaCare in the next two years.

Two is a Supreme Court decision in June 2014 declaring it illegal to offer tax credits, i.e. subsidize, healt plans for patients in 34 federal health exchanges.

Under the first scenario, President Obama could rescue his “signature domestic achievement” through a President veto.

But in the second scenario, ObamaCare might be unsalvageable and might end in an insurance death spiral with collapse of the health law.

To ACA supporters, the second scenario is unimaginable on moral grounds. How could millions of people in a civilized nation be deprived comprehensive affordable health care? To ACA deniers, the ACA is more of a monetary issue. How could a government impose an unaffordable law on people, the overwhelming majority of whom oppose the law?

Our three legal scholars say ObamaCare supporters have “good reason to worry.” By so quickly agreeing to hear the case on November, the Court signaled it was willing to consider the U.S. Treasury stopping issuing tax credits to those receiving subsidies in the federal exchanges. The Court was willing to face the consequences of a death spiral in the insurance industry with “immediate destabilization” of state’s insurance exchange markets with large losses.

At that point, “picking up the pieces would not be easy.” States might be able to set up their exchanges, but they have so far shown no ability or capability of doing so, and many would have legal objections or would erect barriers. The states would be under enormous pressure – from taxpayers, health plans, and hospitals - to do something – but they would not or could not, and ObamaCare would collapse. A Republican congress might come to the rescue with an alternative plan but just how they would work has not been spelled out.

The three commentators on the “fallout” from an adverse King v. Burwell decision conclude"

“ACA supporters thus have good reason to worry. For at least several years, and perhaps for much longer, the outcome of King could determine whether millions of people continues to have access to affordable comprehensive health insurance.”

Friday, January 9, 2015

HMOs As Villains of Health Reform

The other day a friend sent me a January 6 article from the Star Tribune, Minnesota’s largest newspaper by David Feinwachs, former counsel of the Minnesota Hospital Association for 30 years who teaches health law at the University of Minnesota.

These 2 paragraphs capture the gist of the article “There Are Hospitals and There Are HMOs.”

“Many so-called “hospital leaders” appear to be greedy and uncompassionate. I do not defend these people, nor do they represent the values of people who work in hospitals. Hospitals are not simply corporations; they are also the people who provide care. They are the nurses, doctors, pharmacists, technicians, maintenance workers, food preparers and myriad other people who dedicate themselves to healing. And, yes, they “can heal you now.” These people I defend. I always have. I always will. But I am unable to defend our nonprofit HMOs. I fear that they will continue madly accumulating wealth, while people still struggle for access to health care. (Low premiums coupled with high deductibles mean lack of access.)

Hospital excesses may be measured in the millions of dollars, but nonprofit HMO excesses are measured in the billions. The most visible indicator of this excess is the money HMOs hoard in reserves. Since 2003, our nonprofit HMOs have increased their reserves by more than 100 percent. Most of this money comes from HMO participation in public health care programs like Medicaid. In these programs, the HMOs don’t provide insurance; they just act as disbursement agents. Remember that these HMO reserves are pure cash and don’t count other HMO assets such as investments in the stock market, real estate or subsidiary companies. That’s a much bigger cost to the system than hospitals.”

Feinwach’s comments reminded me of an interview I conducted with Richard Burke, CEO of UnitedHealth back in 1988. The interview appeared in my book And Who Shall Care for the Sick: The Corporate Transformation of Minnesota.

Of United Health and Burke, I said,

“Among physicians and hospital administrators, Richard Burke is admired, feared, and loathed. He believes that dominant health care plans will:1) win market share by offering innovative health plans with low premiums, comprehensive benefits, and flexibility of product; 2) narrow the list of hospitals with which they deal by guaranteeing large number of patients in exchange for fee discounts; 3) narrow the list of physicians by dealing only with those doctors who offer the most “cost-effective services for patients; 4) cut the cost of physician expenses by redistributing income from high-cost specialists to less well-paid primary care physicians.

Burke was a prescient prophet. UnitedHealth has risen to #14 on the list of Fortune 500 companies, employs more than 172,000 people, serves some 100 million customers, and has $122 billion in revenues with profit margins of over 10%.

Other water has gone over the HMO bridge as well. CEO William McQuire was forced to resign in 2006, but as a settlement took $1.1 billion with him; United as spent more than $2 billion lobbying the federal government for favorable contracts; has captured the AARP supplemental Medicare market; and has now entered multiple health exchange markets.

Give UnitedHealth care executives credit.

They know how to turn a dollar and how to turn the heads of Washington-based policy wonks and bureaucrats.

With last quarter’s 5 % GDP income growth, the United States has a much faster growing economy than any European country. Spain grew at 0.5%, Germany at 0.1%, France at 0.3% and Italy at -0.1%.

Why the difference? Probably because the 28 nation members of the European Union have high-tax, high-spending, high-regulation, high-social welfare states and business-restricting policies that reduce incentives to hire new workers, invest in new plants and equipment, implement new technologies, and start new businesses.

Consequently, U.S. growth via a via Europe is expected to be 2.5% to 3.0% over the next year, U.S. employment is projected at less than 5.8% vs 11.5% for Europe, and U.S. government tax rates will probably remain at 36% while Europe’s will be close to 49% due in no small part to their generous social welfare programs, which include, of course, universal health coverage. With the continuing recession in Europe, advances in medical technology, and the European’s increased Internet knowledge of what’s available in other countries, health care costs are skyrocketing in Europe, and many countries are scrambling to come up with private alternatives to government, including private insurance, retail urgent care centers, and concierge medicine.

Critics of ObamaCare fear the U.S. may become like Europe if present trends continue – a $500 billion increase in taxes secondary to health reform, cost overruns of more than $1 trillion over the next ten years, the burdens of 2500 new regulations, over 50 new federal agencies and programs to oversee the bureaucratic maze, unsustainable growth in entitlement programs ( 9.7 million or 16.5% in Medicaid enrollments thanks to the health exchanges).

In all of this the U.S. has certain undeniable advantages over Europe - a large uninhabited land mass rich in natural resources, a large growing population, robust capital investments, low unemployment, high consumer consumption, a relatively young population thanks to immigration, a stimulated and re-invented automobile industry. a vigorous entrepreneurial and innovation climate producing such things as fracking and the recent success of large scale start-ups – Microsoft, Google, Apple, Facebook, and Twitter. Two big things holding the U.S. back are its high health care and entitlement costs and the highest corporate income tax in the world at 35%.

According to the World Bank, by 2019 the U.S. will still have the world’s largest GDP at $17.4 trillion with China at $10.4 trilliomn Japan at 4.8 trillion, Germany at $3.8 trillion, France at 2.9 trillion, the U.K/ at $2.8 trillion, Italy at $2.1 trillion, Russia at 2.trillion. and India at 2.0 trillion. In terms of income, the projections are $67,396 for each U.S. citizen, $43,739 for each European, and $11,078 for each China person.

How much money will be left over after taxation for social welfare programs and how high health care costs are a matter left out of projections. But barring war, pestilence, and environment disaster, the United States promises to be the premier place to live with the best opportunities for economic growth and upper social mobility

Thursday, January 8, 2015

Steven Brill’s new book, America’s Bitter Pill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System, 512 pp. Random House. $28, is all about one man’s rage about America’s health system. The book is about lobbyists for hospitals, drug companies, medical device manufacturers, insurance companies, and other special interests have conspired to make America’s health costs higher than any other country by a factor of 40% to 60%. It is about how and why patients have little leverage and little knowledge to change the system. It is based on Brill’s October 2013 article by the same name n Time magazine and on his own personal experiences after undergoing a $200,000 open heart operation. . In essence, Brill maintains our entire system is a giant rip-off without any power of patients and without any incentives for health care stakeholders to change.

Here are quotes by Grill, a lawyer and health care journalists, about his impressions of the system.

“Depending on one’s view, this secret deal (the health care law) between Obama political operatives, PhRMA, staffers from the Senate Finance Committee who had just brokered a multibillion-dollar deal with ¬PhRMA, major unions and other liberal groups was proof that Washington was finally buckling down, coming together and getting the people’s business done; or it was Washington at its worst: liberal groups selling out to big business to accommodate all the groups’ special interests.”

“There I was: a reporter who had made hospital presidents and hospital executives and health care executives and insurance executives sweat because I asked them all kinds of questions about their salaries and about their profit margins. And now I was lying on a gurney in a hospital in real fear of my life."

"At that moment I wasn't worried about costs; I wasn't worried about a cost benefit analysis of this drug or this medical device; I wasn't worried about health care policy.”

“It drove home to me the reality that in addition to being a tough political issue because of all the money involved, health care is a toxic political issue because of all the fear and the emotion involved."

"A patient in the American health care system has very little leverage, has very little knowledge, has very little power.”

“ I exhausted the deductible on the policy that my wife and I had. Once I paid the $12,000, I was indifferent to all the costs because I was paying zero.”

“We're paying a lot more for everything because we have this naive assumption that healthcare can be a marketplace when everyone of us sitting here knows that when we're sick, we're not a savvy consumer of healthcare."

“We have no idea what we are buying, we have no idea what the cost is going to be, we have no control over those costs, and the only thing we know is, we're scared and we want to get better."

"It's because of the legislation. There's nothing in the legislation that brings down the cost of healthcare."

"At every turn, when they (Obama and Democrats) tried to do something substantive to bring the cost down, such as control the price of drugs, deal with exorbitant non-profit hospitals' high profits, they were stopped by the lobbyists.”

"And the best test of all this is, the only way that a bill this big will pass in Washington is that the powers that be decide that it should pass. So the drug companies are making more money, the hospitals are making more money, the medical device makers are making more money, and everybody's happy except the tax payer."

"It can only get better when people decide, that as healthcare consumers and taxpayers, they're not going to let the lobbyists in Washington for the hospital industry, for the drug industry, for the medical device industry, have their way. And that's a difficult thing."

"What I learned was that I didn't care about the costs at the moment I was lying on the gurney. And nobody would. You will beg, borrow and steal, whatever you have to to get the money, to get yourself healthy or to get your loved one healthy.”

“My experiences before and after surgery were emblematic of just how screwed up the system is."

"He (The CEO of UnitedHealth) looked at it, and he looked at it (my bill) , and he said, 'I could sit here all day and I couldn't explain that to you. I don't know why they sent that to you.' And I said, 'Well, aren't you 'they'?'"

" This book uses the largest and most screwed up industry in the country to illustrate that we can't do the nation's business in Washington. It shows how the country doesn’t work at its core.”

The Health Reform Maze

Buy the Book

Book Description: In this first book in a series of four, Richard L. Reece, MD. provides a unique view of the roll out, and run up, of the Affordable Care Act. Reece shows in this book the progress and facets of ObamaCare's marketers and messengers, as the day approached for the launch of health insurance exchanges - the single most public and problematic portion of the new law. This is a must read for anyone who wants to chronicle this attempt to organize more than one-sixth of the U.S. economy by adding layers of federal government control and regulations.

Reece has been writing about U.S. health care for more than 45 years. His knowledge and experience, added to his keen intellect and gift of subtle humor, make this book a valuable part of anyone's collection.